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Toward an Enabling Legal Environment for Civil Society

Statement of the Sixteenth Annual Johns Hopkins International Fellows in Philanthropy Conference Nairobi, Kenya, July, 8, 2004.

Preamble

Though they pursue public purposes, civil society organizations are fundamentally private organizations. Yet, the ability of these organizations to carry out their special functions depends importantly on the legal environment within which they operate, and this, in turn, depends on actions by the state. Indeed, establishment of an enabling legal environment is one of the most important contributions governments can make to the development of civil society organizations.

Clearly, there is no single “right” way to design civil society laws and regulations. Legal traditions, as well as traditions of civil society activity, differ widely among countries. Significant variations can thus be expected in how legal systems handle the crucial issues that civil society operations entail.

Despite such variations, however, it is possible to identify some general principles or rules of good practice that can usefully guide the development of civil society law around the world.

I. Caveats and Assumptions

Certain fundamental convictions and assumptions have guided the thinking embodied in this Statement. Among these are the following:

• While the state and its laws are ultimately responsible for ensuring an enabling legal environment for civil society organizations, responsibility for such an environment does not rest with the state alone. The business community, development partners, other stakeholders, and the civil society sector itself also have important roles to play in creating an environment conducive to effective civil society operations.
• A healthy and vibrant civil society sector requires a healthy and vibrant state committed to the rule of law and to basic democratic processes. The guidelines outlined here will work best in the presence of such democratic conditions. In addition, however, adherence to these guidelines can help promote the rule of law and basic democratic processes where these are not yet fully in evidence.
• A well-designed system of civil society law and regulation requires a reasonable balance between the privileges these organizations are accorded and the responsibilities they are expected to exercise.
• For the purposes of this Statement, we define civil society organizations broadly as any organizations, whether formal or informal, that are not part of the apparatus of government, that do not distribute profits to their directors or operators, that are self-governing, and in which participation is a matter of free choice. Both member-serving and public-serving organizations are included.

II. Formation and Legal Status

The right to form civil society organizations is a fundamental human right that belongs to individuals and is not bestowed by government. This right derives from the basic rights to free speech and association, which should be enshrined in the fundamental law of a country.

While civil society organizations have an inherent right to exist and operate as informal organizations, however, a crucial part of the enabling legal environment for civil society organizations involves arrangements for such organizations to incorporate and thus acquire formal “legal personality.”

Governmental action is crucial to the extension of legal personality status to civil society organizations and is often accompanied by some form of registration and regulation. A number of crucial principles should govern the design and execution of these incorporation and registration procedures. Most important among these are the following:

• Legal provisions allowing civil society organizations to incorporate and thus obtain legal personality status should be made easily available.
• While provisions for civil society organizations to incorporate should be made easily available, these provisions should not be mandatory.
• The right to associate and to form civil society organizations carries with it the right of these organizations to the fundamental rights that apply to natural persons, such as the rights of freedom of speech and association, and the right to petition the government.
• Governments may choose, as a condition of incorporation, to register civil society organizations. Such registration can help clarify the status of these organizations and bolster public confidence in them. Any such registration provisions should adhere to the following guidelines, however:
  • Registration should be conducted by independent authorities not bound by the policies of particular governments, which may change from time to time.
  • Registration procedures should be uniform wherever conducted, and registration with one competent authority should suffice for the entire country.
  • Procedures and criteria for registration should be publicly available, clear, and straightforward; fees should not be prohibitive; registration processes should be expeditious; and registration should not be refused if all requirements for registration are met.
  • Any denial of registration must be subject to court review.

III. Tax Privileges

Because of the contributions civil society organizations often make to community life, to the resolution of public problems, and to the strengthening of democratic processes, it is in the government’s interest to encourage such organizations. One efficient way to do this is through special tax concessions. The following principles can usefully apply to the design and operation of such tax concessions.

• All types of civil society organizations should be eligible for tax relief, though the form and extent of such relief may vary by type of organization.
• As a general rule, all forms of civil society organization income, including that from commercial activities, should be exempt from income taxation so long as such income is used to support the basic purposes for which the organization was granted tax exemption.
• In addition to exempting the income and purchases of civil society organizations themselves from taxation, special provisions should be made to allow deductions for charitable contributions to such organizations.
• The administration of the tax concessions for civil society organizations, both those affecting the income and purchases of the organizations themselves and those applicable to charitable contributions to these organizations, should be clear, widely disseminated, and as automatic as possible.

IV. Transparency, Reporting, and Accountability

To retain public trust, civil society organizations must be transparent in their operations. Such transparency can be achieved voluntarily by organizations through regular reports and communication with their various stakeholders. However, public authorities may legitimately mandate such transparency by requiring regular reports from registered civil society organizations. Several principles should apply to the design of such public reporting requirements, however:

• Reporting requirements should serve valid public purposes, not be unduly burdensome, and, where possible, be harmonized with reporting requirements from other public and private bodies.
• Government should establish procedures for receiving and storing required reports from civil society organizations, and for making such reports available to the public in an easily accessible manner.
• Coordinating bodies, such as NGO Councils, should be encouraged to assist organizations in meeting public registration and reporting requirements.

V. Advocacy and Civic Engagement

Civil society organizations are not simply service providers. They are also, very critically, vehicles for advocacy and civic engagement. The advocacy and civic engagement functions of civil society organizations raise particularly sensitive legal and political issues, however. The following principles should guide the resolution of these issues:

• The basic right of nonprofit organizations to engage in advocacy and lobbying should be confirmed in substantive legislation.
• While confirming the basic right of civil society organizations to engage in advocacy and lobbying, governments can limit civil society advocacy to nonviolent means, encourage credibility on the part of civil society organizations, and restrict civil society organizations from engaging in political campaign activity on the part of particular parties or candidates.
• To facilitate civil society organization advocacy and lobbying, civil society organizations should be ensured reasonable access to government decision-making processes and information.
• To safeguard the fundamental right of civil society organizations to engage in advocacy and lobbying, specific mechanisms should be put in place. Among other things, civil society organizations should have standing to challenge public authorities in courts of law over access to government information and to the processes of policy decision-making.

Conclusion

Civil society organizations perform important public services by responding to human needs and promoting the health of communities. Regrettably, however, the legal position of such organizations is often highly precarious or unclear. Too often, government perceives civil society as a threat and acts to limit its discretion and role. But government has an important responsibility to create the legal conditions that enable civil society organizations to perform their important missions. This requires a balance between equipping civil society organizations with privileges and burdening them with responsibilities. It is our hope that the principles outlined here will help governments strike this balance in a responsible yet enabling way.